KDM Shipping EBITDA falls 5% yoy in 9M13

Leading maritime company KDM Shipping (KDM PW) reported a 32% yoy increase in sales to USD 25.4 mln in 9M13, though its EBITDA slid 5.0% yoy to USD 10 mln and net income decreased 4.9% yoy to USD 8.6 mln. The company explained the decline in earnings by growth in costs, caused by opening new Baltic routes and a temporary revenue drop in its passenger segment (to 3% from 16% of total revenue in 9M12), driven by the reconstruction of a Kyiv pedestrian zone along the Dnipro River, where the company’s pier is located. KDM Shipping expects the reconstruction to end before the 2014 season. The company announced it’s focusing on finalizing negotiations for adding new ships to its fleet.

Roman Topolyuk: Despite a yoy decrease in earnings and margins (EBITDA margin was 39% in 9M13 compared to 55% a year ago), the company possesses a set of growth drivers, the main one being an expected increase in its fleet. The company has solid capacity to fund this growth from internal sources. Cash on balance stood at USD 20.1 mln, as of September 2013, while its debt-to-equity was 0.05x. That fully covers the payment for two of six ordered vessels from Chinese shipbuilders with a deadweight of 6kt – each to be delivered by 2Q15 – while the company intends to raise debt financing as well. The total current deadweight of KDM’s vessels is 29.7 kt.